RJOAS, 8(92), August 2019

DOI 10.18551/rjoas.2019-08.13

IMPLEMENTATION OF FARM MANAGEMENT AND FINANCIAL FEASIBILITY

EVALUATION OF SHALLOT (ALLIUM ASCALONICUM L.)

Hardana Andrean Eka*, Pariasa Imaniar Ilmi, Riyanto Sugeng, Pratiwi Destyana E.
Faculty of Agriculture, University of Brawijaya, Malang, Indonesia
*E-mail: andrean@ub.ac.id

ABSTRACT
The research objective ware (1) to analyze the financial feasibility of farmers who cultivated
shallots in research area, and (2) to describe the management of shallot farm management
in the highlands, especially in Batu City, East Java. Determination of research location of the
study was conducted purposively, namely in the Junrejo Village, Junrejo subdistrict, Batu
City. The method of retrieving farmer respondents was carried out using a probability
sampling approach with a simple random sampling method. Data analysis methods that are
suitable for research on farming analysis and marketing of shallots, based on an approach
are included in the method of quantitative data analysis for farming income analysis and
qualitatively for management analysis of shallots farming. The average commodity
production of shallots is 14.6 tons / ha, with the calculation of the average total cost of
farming including fixed costs (equipment depreciation, land tax, and land rent) as well as
variable costs (seeds, fertilizers, pesticides, and labor) ) issued 54,010,236.2 IDR/ha and the
average selling price of IDR. 7,000. Then the calculation of farm income in the study area
was IDR 47,916,916.2 / ha, so the data was said to be profitable onion farming. The
management of shallot farming in Junrejo Village, Junrejo Subdistrict, Batu City has been
running according to the field implementation, but there are several management functions
that must be given attention such as controling functions which are more concerned in field
implementation especially with regard to farming input applications.

KEY WORDS
Farm management, financial feasibility evaluation, farming, agribusiness.

Management capability in agribusiness activities is important to be applied to various

agricultural commodities. This management activity is needed because it is not merely a way
of life in managing farming. In its meaning more than that, the process of implementing it in a
company is needed in an effort to avoid the ups and downs in agribusiness (Rahardi, F., et
al, 2000).
Handling shallot commodities needs optimal application in agribusiness management.
The implementation of integrated management is needed because the commodity of shallots
has many benefits and has high economic value. The consumption of shallots in Indonesia
per capita per year reaches 4.56 kilograms or 0.38 kilograms per capita per month. The high
demand for shallots that continues to increase does not only occur in the domestic market,
but also has the opportunity to export (Directorate General of Horticulture, 2012)
Integrated management of agribusiness management is carried out to increase the
production of shallots both in quantity and quality. Agribusiness management activities
ranging from business planning, provision of facilities and infrastructure, crop cultivation, to
handling the results and marketing are carried out in an integrated and mutually supporting
manner. So that in this case a management is needed that can summarize natural factors,
capital, labor, and technology with the factors of facilities and infrastructure and marketing.
In the implementation of agribusiness management management, one of them is the
financial feasibility of shallots. The shallot farming in the highlands during the rainy season
also needs to be known, given the high risk of failure. This activity is to find out whether the
farming activities are still profitable and can provide incentives for farmers to do shallot
farming in the highlands in the rainy season in a sustainable manner. In general, the analysis
of shallot farming has only been done for the lowlands (0-500 masl) (Nurmalinda et al, 1992;

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Soetiarso and Madjawisastra, 1993; and Nurmalinda et al. 1994), while for the highlands
there is still little.
Based on the introduction above, the authors are interested in conducting research on
"the application of farming management and evaluating the financial feasibility of shallots in
rural Indonesia". The research objective was to (1) analyze the financial feasibility of farmers
who cultivated shallots in the study area, and (2) describe the management of shallot farming
in the highlands, especially in Batu City, East Java. Therefore, it is expected that the analysis
of financial feasibility and management of shallots farms cultivated by farmers in the research
area can be formulated as alternative actions in the form of technological improvements and
appropriate policies to increase shallot production, which in turn can increase farm income.

METHODS OF RESEARCH

Determination of the location of the study was conducted purposively, namely in the
Village of Junrejo, District of Junrejo, Batu City. The consideration of determining the location
of this study is based on data from the Agriculture and Forestry Service of Batu City (2012).
The research area is the center of commodity production of shallots with the achievement of
land area and the largest production, which is 65 ha with a production of 665 tons in Batu
City. The method of retrieving farmer respondents was carried out using a probability
sampling approach with a simple random sampling method. The number of samples
obtained based on the taking of the parel formula was 37 people (from a population of 356
people) who were in the NICE Farmers' Association.
Data analysis methods that are suitable for research on farming analysis and marketing
of shallots, based on an approach are included in the method of quantitative data analysis for
farming income analysis and qualitatively for management analysis of shallots farming.
Based on a review of previous research conducted by Zalukhu (2009), the total cost of
farming production can be calculated using the following formula:

TC = TFC + TVC

Where: TC = The total cost of farming shallots; TFC = Total fixed costs for onion farming;
TVC = Total variable cost of farming onions; Analysis of Total Farming Revenues.
The total receipt of shallot farming is the value of money obtained by farmers from the
sale of the production of red onion farming at the price of the unit. The amount of income
obtained by farmers can be calculated using the formula:

TR = P x Q

Where: TR = Total receipt of onion farming; P = Selling price of shallots; Q = Total onion
production.
Based on previous research conducted by Utami (2009), the amount of total farm
income can be calculated using the formula:

Π = TR - TC

Where: Π = Income of onion farming; TR = Total Acceptance of onion farming; TC = The total
cost of farming shallots.
After that, according to Soekartawi (2002) to identify the financial feasibility analysis,
namely R / C, which was formulated as follows:

𝑅 / 𝐶 = 𝑇𝑅 / 𝑇𝐶

Where: TR = Total Revenue (total receipt); TC = Total Cost (total cost); If R / C ≥ 1, then the
farming is said to be feasible; If R / C <1, then the farming is said to be inappropriate.

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RESULTS AND DISCUSSION

Farming analysis is done by calculating the income level of shallot farming one planting
season. In this analysis find out the amount of costs incurred by the farmer, such as the cost
of production input facilities, labor costs, equipment depreciation costs, land tax costs, and
land rental costs. In more detail, this will be discussed in the following explanation.
The total cost of farming production is the cost used by farmers in the implementation
of the production process, the amount of which is obtained from the sum of fixed costs and
variable costs. Both types of costs represent all the sacrificial values of various production
inputs that are issued during the production process. The calculation of production costs for
shallots consists of only fixed costs (not calculating capital interest) and variable costs,
because the capital used by respondent farmers to manage shallots comes from personal
capital, not in the form of loan capital.

Table 1 – Average Production Costs of Shallot Farming in the Research Area

Average cost
No Component
(IDR) (%)
A. Fix Cost
1. Tools Depreciation 124.349,43 6,19
2. Farmland Tax 175.414,12 8,72
3. Rent land 1.710,73 85,09
Total fix cost 2.010.488,87 100
B. Variable cost
1 Seed 12.545.000 24,13
2 Fertilizer 7.014.481,49 13,49
3 Pesticide 6.794.288,2 13,07
4 Labor 25.645.977,6 49,31
Total cost production 54.010.236,2 100

Fixed costs on shallot farming are relatively fixed costs and do not depend on the
amount of production obtained in farming. Components for fixed costs in this study consist of
equipment depreciation costs, land tax costs, and land rent. In Table 1, it is also explained
that the total average of the fixed costs of shallot respondent farmers is IDR. 2,010,488.87.
Variable costs are costs which are used up in one planting season and affect the size and
size of the production of shallot farming that will be produced. Raw material is a variable that
can change the amount and value in the production process. The higher the production, the
more raw material needs are needed. Based on Table 1, it can be seen that the total use of
the average variable costs for the respondent farmers in shallot farming is IDR.
32,446,014.7. Variable costs in shallot farming consist of various components such as seeds,
fertilizers, pesticides, and labor.
Total revenue in shallot farming is the value of money obtained from the sale of the
farm products. The amount of acceptance in shallot farming is influenced by the size of the
production produced, where the greater the production, the greater the income that will be
obtained by the farmer. If the selling price is high and followed by a high amount of
production, then the revenue obtained will be even greater, and vice versa.

Table 2 – Average Revenue of Shallot Farming

No Description Value
1 Average of Shallot Production (ton/ha) 14,6
2 Average of Shallot Price (Rp/kg) 7000
Total of revenue average (Rp/kg/ha) 101.926.432,4

The production of each land between farmers who cultivate shallots varies depending
on the size of the land and the production facilities and infrastructure used. The average total
production produced by local farmers in shallot farming reaches 14.6 tons / ha with a selling
price of IDR. 7,000 / kg. Pricing obtained by farmers from marketing institutions is based on

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market prices affected by imported onions from India and China in several regions in Malang.
Local red onions can compete because the quantity of imported shallots is decreasing in
quantity in the market. In addition, in terms of quantity superior in terms of taste, the aroma is
sharp; the skin color of the tuber is dark red, and crisp. Based on the calculation of the
quantity of shallot production per hectare multiplied by the average selling price of shallots
prevailing at the time of the study, so that for the total average income of respondent farmers
in the study area it reached IDR 101,926,432.4 / kg / ha.
Farm receipts have an influence on the size and size of the income of farmers who
cultivate shallots. This is because the income earned by the farmer comes from the
difference between total revenues and the total production costs incurred during the farming
process. So from that by knowing the amount of revenue and total costs that have been
incurred by the respondent farmers, so that it can be seen also the amount of income
earned. The average income obtained by farmers at one planting season can be seen in
Table 3 below.

Table 3 – Average Income of Red Onion Farming

No Uraian Nilai
1 Rata – rata Penerimaan Bawang Merah 101.926.432,4
2 Rata – rata Total Biaya Bawang Merah 54.010.236,2
Total Rata – rata Penerimaan (Rp/kg/ha) 47.916.916,2

Based on Table 3, by making a farm analysis it can be calculated mathematically in

trying on one hectare of shallots. Farming is said to be profitable if the difference between
revenue and expenditure is positive. Based on the calculations, it can be seen that the total
average income obtained by farmers who practice shallots in the study area is Rp.
47,916,916.2 / ha, so that it can be said to be profitable.
The ratio of revenue to expenditure is the profit rate of onion farming. The R / C ratio
for total costs is greater than 1, so it can be said that farming is carried out favorably by the
farmer manager. The value of t calculated R / C ratio over the total cost is 1.9. Based on
these results from the test, onion farming in Junrejo Village has a value of the ratio of
receipts to expenditures that is greater than 1. This condition is one indication that onion
farming in research locations is relatively profitable.
The initial preparation of planting shallots must begin with the opening and processing
of the land perfectly in order to produce optimal shallot production. Opening and processing
land is not a difficult activity. The land of farmers planted with shallots needs to be cleaned
first from grass and various wild plants by using mechanical equipment such as hoes or
using hands manually. The results of cleaning grass and wild plants are then burned outside
the field. The purpose of land clearing is to eliminate grass as well as to prevent pests and
diseases.
If the land used to plant shallots by local farmers has been established, for the first
action is to determine the area unit and spacing pattern. The planting distance for shallots
which is generally applied by respondent farmers in the study area is 15 x 15 cm.
The red onion seeds in Junrejo Village are from seedlings of Philippine red onions
imported by way of imports from the Philippines. In general, farmers in the research area get
onion seeds from marketers. Farmers still use seeds from abroad, because they are
generally in accordance with local conditions. In addition, it can produce a good and optimal
onion production.
Planting is done at the end of the rainy season. The way to plant them is to peel the
skin of the bandage first and separate the cloves. To speed up the release of shoots, before
planting the seedlings are cut to 1/3 part. Seeds are planted standing on beds until the
surface of the incision is covered by a thin layer of soil.
The actions to preserve onion in the research location are as follows:
Watering can use a spout or sprinkler, or by flooding the water around a bed called the
system. Irrigation is carried out regularly in accordance with the needs of plants, especially if
there is no rain.

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This activity aims to eliminate wild plants that grow around shallots, regulate the
humidity of the garden, prevent pests and diseases, and reduce competition between
shallots and weeds in getting water and nutrients from the soil. done together at the time the
plant is 21 days old.
Stitching is carried out by replacing dead plants with new onion seeds. The replanting
process is still carried out as long as the core plant is not yet two weeks old.
Fertilizing shallots is done so that plants are able to produce with optimal results and
add and restore nutrients to the soil. The type and dosage of fertilizer used in onion farming
in Junrenjo Village are using organic fertilizers and inorganic fertilizers. Fertilizers given are
animal fertilizers with a capacity of 8-10 tons / ha, while inorganic fertilizers with urea doses
of 100 kg / ha, ZA 200 kg / ha, TSP / SP-36 250 kg / ha. KCI 150 kg / ha (according to soil
fertility).
Pests and diseases can attack all parts of the plant, starting from the roots, stems, and
leaves. Pest control is carried out depending on pest and disease attacks. Pests that give up
onion are caterpillar, leaf caterpillar, armyworm, aphids, and root nematodes. How to control
pests in shallots in Junrejo village using furadan pesticides sprinkled during processing of
land. Pests found on red onions are caterpillar onions and trips. Disease control in red onions
uses adhesives and antracol. Adhesives are used to control molten disease (fusarium wilt),
and antracol is used to control anthracnose.
Harvesting is done if the tuber is about 60 years old, enough, the leaves begin to turn
yellow, how to remove the whole plant carefully so that there are no tubers left behind or
abrasions. For 1 (one) hectare well-cultivated shallots, 10-15 tons can be produced
(Rukmana, 1995). In the study area for the Philippines varieties yielded up to 14 tons / ha
more than the average productivity produced by local farmers
In onion farming activities by respondent farmers in the research area are selective in
determining / determining the parts in the organization as well as the tasks and functions of
each that is in the organization. The local farmer institution, namely the NICE farmer group,
can determine the position according to the expertise / ability possessed by the respondent's
farmers. Farmer groups as a forum for organization in the hope that they can cooperate
between farmers and other farmers.
In respondent's onion farming, they try optimally to increase production both in quality
and quantity. Local farmers with spell farming from Batu's agriculture and forestry service
were given guidance (counseling) and a comparative study was held to other areas followed
by shallot farmers to increase their experience and knowledge, especially in onion farming.
In the implementation of the control, the respondent farmers were very careful in
conducting farming and if necessary made corrections of the results of the work carried out
so that what was being carried out by group members could be directed or guided to the road
that was in accordance with the aims and objectives planned and determined by group. This
activity was carried out by farmers on shallot respondents in Junrejo Village so that farming
carried out by farmer groups could be successful and in accordance with group expectations.
The steps that are generally carried out by farmer groups on shallot farming in the
study area include:
 Planning by farmers can be structured in onion farming so that it can produce the
quality and quantity of shallots, so it can compete with shallots from other regions;
 Provision of inputs for fertilizers and pesticides must be in accordance with the
prescribed dosage so that the shallot plants produce maximally by issuing minimum
costs.

CONCLUSION AND SUGGESTIONS

The implementation of delay selling activity in rice farming business was conducted by
Rice Milling Unit (RMU) managed by GapoktanMutiaraTani. This unit provides mill and
storage for farmers who want to delay their selling. Rice storage can be done partially so that
farmers feel safe and flexible when they want to sell or take their grains. Furthermore, it is
supported by warehouse facility with the capacity reaching 10 tons.

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Agribusiness development in rice farming business with delay selling activity gives
more benefits compared to non-delay selling activity. Regarding total cost, delay selling
actors have higher cost than those non-delays selling but the difference of rice selling price
per kilogram makes delay selling actors obtain more profit than those non-delays selling.
Agribusiness development was also conducted by farming Business Corporation in which the
farmers (i.e. farmers group MutiaraTani) in Selodakon Village runs it. As a start, pilot project
with 10 hectare rice field was applied with irrigation technique starting from breeding to post-
harvest.
Suggestions:
 As supporting facility, the capacity of grain storage in Gapoktan warehouse can be
enlarged by expanding storage place and area of grain drying to accommodate the
needs of seven farmer groups in order to participate in delay selling activity;
 The government can support the sustainable of this program especially for marketing
aspect by cooperating GapoktanMutiaraTani with Bulog institution in Jember district.

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